Dairy farmland in New Zealand, the top milk exporting country, appreciated by 6.0% in the August-to-September period, compared with the average in the July-to-September quarter, the Real Estate Institute of New Zealand said.
The market remained well below its peaks despite the recovery, with values in October itself down 18.6% year on year, as measured by a Reinz index, a decline reflecting the slump in world dairy prices from 2013 highs.
Still, «quality» pastoral farms have attracted «some exceptional prices», said Reinz, flagging «two very strong sales of quality dairy units» in Waikato in North Island, priced at NZ$65,800 ($42,630) and NZ$57,500 per hectare.
On a per acre basis, the more expensive deal is equivalent to $18,000.
The average New Zealand dairy farm typically achieves somewhere around the mid-NZ$30,000s per hectare, according to recent Reinz data.
‘Speculation gained some answers’
The sales offered reassurance for a land market in central North Island in particular rocked when the government in September rejected an attempt by China’s Shanghai Pengxin, which already owns 29 farms in New Zealand, to buy the 13,800-hectare Lochinver farm in the region.
The government said that a purchase by Pengxin, which has grown to become New Zealand’s third-ranked dairy group did not show «substantial and identifiable» benefits for the country.
Reinz flagged «speculation» of farmland values after the rejection, which prompted Pengxin also to ditch plans to buy a further farm, and launch legal action against the New Zealand government.
However, «that speculation gained some answers in the latter part of the month» with deals achieving «values fully firm on last season», said Brian Peacocke, the institute’s rural spokesman.
Overall New Zealand farmland values were 0.6% higher in the August-to-October period compared with the July-to-September quarter, but 5.9% lower year on year in October.
TPP boost
In fact, the Lochinver property, currently operated as a sheep and beef station, sold separately early this month to Rimanui Farms, a privately-owned New Zealand farm operator.
Besides 22 houses, used to accommodate the 20 permanent staff, and 91 kilometres of pumice roads, Lochinver also boasts six cattle yards, three woolsheds and three airstrips.
Reinz said that farm values overall had also been supported by the signing of the Trans-Pacific Partnership deal, billed as the largest regional trade agreement in history, covering almost 40% of the global economy, although the agreement has been termed disappointing on dairy by some New Zealand commentators.
Source: Agrimoney